The Power of Positive Impact Partnerships in Saudi Arabia

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One of the most critical issues facing the MENA region (Middle East and North Africa, a group of 21 countries) now is the creation of jobs to accommodate its rapidly growing population. Growing at 2 percent, compared to 1.2 percent globally, there is what is often called a ‘youth bulge’ with nearly 95 million people between 15 and 24 years . This trend seems likely to continue in the coming years. Countries like Iraq, Yemen and the Palestinian Territories are experiencing high fertility rates and rapid youth population growth, with some well over 40 percent.

The ramifications on the labour market are clear. According to research, an estimated 43 million young people are entering the MENA’s in the coming years. Combine this with worsening macroeconomic conditions, and governments are unlikely to be able to absorb the growth in job seekers. Increasingly, the pressure is on the private sector to take up the slack.

Saudi Arabia Positive Impact Framework

The numbers are startling. With an astounding 55 percent of the total Saudi population under the age of 24, 31.2 percent of young people aged between 15 and 24 are unemployed. This is 25 percent higher than the MENA average, and three times the OECD average. In fact, Saudi youth make up 90 percent of all unemployed Saudi citizens in the Kingdom. This is a critical issue that looks likely to only get worse in the years to come, with 29 percent of total Saudi population under the age of 15. Additionally, KSA has a youth growth rate of 2.62 percent, outstripping the MENA average of 1.7% and more than double the global rate of 1.1%.

In Saudi Arabia, the government has made it clear that it can’t and won’t absorb this glut. Vision 2030 sees increased pressure on the private sector to fill the void with the target of 50 percent of all Saudis employed in the private sector by 2020.

The private sector is reluctant to take on this responsibility. According to research, 44 percent of business leaders do not see it as a priority for their company to find appropriately qualified Saudi youth to fill vacancies. Further to this, they have little faith in the education system that is feeding them job seekers with only 34 percent believing that the education system prepares youth appropriately for the job market. To top it off, the private sector companies are under intense pressure from macroeconomic factors. In 2016, non-oil private sector growth rate was only 0.2 percent, the lowest in 25 years, and the trade hotels and restaurant sector, seen as a reliable proxy for consumer spending, was down 0.8 percent.

According to the research , solutions to date show little progress in confronting the challenge of youth unemployment in a structural manner, in spite of existing financial means. The outlook seems grim in transforming the Saudi economy to effectively manage, among other things, the glut of young people entering the workforce over the coming years.

The need for an innovative approach is clear. The old ways will not do. Increasingly recognized internationally as a successful tool to address these kind of complex societal issues, Positive Impact Partnerships (PIP) provide a systemic solution for market failures that create enduring and measurable economic and social value. Through bringing together multiple actors within a given industry to develop and ecosystem of suppliers, customers and service providers; creating long-term partnerships; jobs; and a differentiated competitive advantage; real and enduring change can be achieved.

To create PIPs to address job creation, multiple players across Saudi Arabia, companies, local municipalities, the community, education providers both public and private, and the third sector (NGOs), need to come together to agree on the vision and the plan to execute a Positive Impact Partnership strategy successfully. These players can then work together to co-create new ecosystems. A catalyst or backbone organization needs to be assigned to help set ground rules and develop shared measurement system to ensure impact, in this case jobs for young Saudis, is closely monitored and measured. Through creating consensus and commitment, as well as accountability and a governance structure

PIPs provide the MENA region with the opportunity to transform an inefficient, dysfunctional local equilibrium into a new sustainable ecosystem and harness the vast human resource that exists within the region.

The MENA region has the urgent need to meaningfully engage the vast resources it holds in its youth, and leveraging their intelligence, enthusiasm and ambition to become the leaders of the future. For Saudi Arabia in particular, PIPs provide a significant opportunity to address this urgent issue. By creating a PIP with the private sector, third sectors and the government for youth job creation, based around the venture philanthropy/social enterprise model, it will be able to achieve seven key elements to improving youth employment:

  • Effectively connect youth with businesses through a sustainable mentorship approach;
  • Build volunteering programs designed to develop the work ready skills that are in demand by employers in Saudi youth;
  • Encourage students to select careers in areas of labour market need such as STEM through career guidance and awareness;
  • Creating an appetite among Saudi youth to enter the private sector;
  • Support skills development in strategic sectors;
  • Build effective links between the labour market and the education system, making it more relevant for both students and the business community, and encouraging Saudi youth to stay longer in the education system;
  • Drive economic growth by supporting business growth.

Positive Impact Partnerships provide bring together diverse communities to drive exciting and scalable solutions, where their vision can be truly and sustainably achieved, ultimately creating opportunities for today and tomorrow’s young people

With Vision 2030, Saudi Arabia is the best and appropriate place to invest your money.